As a never-ending
student of our industry, I periodically make observations at odd intervals and
for unusual reasons. Doing so gives key players in our industry yet another
data point to ponder, be it predictive, historical or both.
advisers had been singing the virtues, and the blues, associated with
408(b)(2), up until last fall. Upon the regulation’s heralded arrival, a fairly
large chorus of “So what?” was heard throughout plan sponsor land.
In the absence of
pending regulation, á la 408(b)(2), what can retirement plan advisers
discuss with plan sponsors as the “next big idea”?
Where Are We
I suggest that all
retirement plan advisers take note of what is circling the perimeter of our
industry. Not paying attention to the shifting landscape today could be
deleterious to your future. What’s going on, you ask?
• The authority to
“make the rules as we go along” seems ever-present around the individual
retirement account (IRA) asset base. For those advisers who incorporate IRAs
and IRA rollovers into your practice, how do you position your chips on
industry oversight? How will your business be impacted if new oversight steps
into place? Can you continue “business as usual” if the IRA rollover rules are
rewritten? If you employ an active IRA strategy in your practice, how prepared
are you to either move out of the IRA rollover business or to lower prices in
hopes of making it up in volume?
• What is your plan
for the pending change that will occur with the rewriting of the fiduciary
standard of care? We can be certain of one thing: A new definition of fiduciary
means that the new standard will either increase the level of care a fiduciary
is required to perform (unlikely); or the level of care required when serving
as a fiduciary will decrease (more likely). If a new standard results in a
reduction in the standard of care, where does the adviser turn for direction on
how to deliver to a superior standard—a standard even superior to a fiduciary
one as defined by the courts?
• What have you
done or do you plan to do to incorporate either plan optimization or behavioral
finance into the plans you oversee? Advisers need to have a solid strategy as
to how they will incorporate outcome-based anything. If you do not, your
competition does. Your clients will find it in one location or another!
• What is your
proactive strategy relating to the retirement readiness of the participants and
the overall health of the plan? If your retirement readiness strategy does not
exist today, when do you intend to impose one? Are you ready to make the
adjustment to know the income replacement ratio status for each and every one
of your plans?